[r20] Dermody: Protecting Taxpayers is Now More Vital Than Ever (1/22/2010)

Friday, January 22, 2010

Start Date: 1/22/2010 All Day
End Date: 1/22/2010

Dermody: Protecting Taxpayers is Now More Vital Than Ever

Like so many Hoosiers, state government is facing economic hardships that force us to seriously analyze how we spend our money.  This requires us to make difficult, but necessary, decisions to keep Indiana from falling into debt. After all, state government should operate just like Hoosier families across the state-we cannot spend more than we take in. 

In fact, things have been so difficult this year that when lawmakers were crafting the state's budget back in June, the state was projected to have $1 billion more in the bank by the end of 2011 than what now been forecasted. Since the creation of that budget, state revenues have not once exceeded their monthly targets.

 In 2009, the state collected nearly a billion dollars less revenue than in 2008; a 7.4 percent decline. In 2010, we're expecting a 6.5 percent decline over prior years. All this means that state revenues aren't expected to exceed 2005 levels until 2011.

The General Assembly and the administration have responded by not raising taxes and cutting spending. State agencies have taken budget cuts totaling nearly 20 percent. State agency capital projects were put on hold and state employee retirement account matching programs were frozen. The number of state employees is the lowest it's been since 1982. Reductions were then made to higher education, cutting funding by 6 percent. And recently, as a last resort, 4.5 percent had to be cut from K-12 education, a section of the budget that accounts for well over half of total state spending.

The end result is this: at the end of 2011, with all these adjustments and cuts, Indiana is still projected to be $60 million in the red.

This is an unusual position for Indiana, a state that over the last several years has prided itself in maintaining a steady amount of reserves to ward off fiscal disaster. Reserves are keeping the state afloat and cuts would have been much deeper if not for our foresight and spending restraint. 

This session, in the General Assembly, we have taken up other measures to protect taxpayers. Last week, a bipartisan vote helped to pass House Joint Resolution 1, (HJR1). This legislation will give Hoosiers the opportunity to vote on whether to add the 1, 2, 3 percent property tax caps into the state's constitution. I supported this measure to allow all Hoosier voters the chance to weigh in by way of a November 2010 referendum. This means that you will decide to permanently cap your property taxes or not.

The caps have faced a multitude of critics. Many have said the caps are a "gimmick"-a politically expedient way to please property owners. In my opinion, this could not be less true. While I certainly have reservations over amending our state's founding document, property owners deserve the predictability and assurance the caps provide to property tax bills. In fact, in my recent legislative survey of constituents in House District 20, over 80 percent of respondents said they wanted the chance to vote on making the caps constitutional. It's easy to see why they want that opportunity-when is the last time a home owner or business owner knew that his/her bill wouldn't exceed a set percentage of his/her property's assessed value? How many property tax crises must we face before someone will stand up for taxpayers?

For 35 years, the General Assembly has been struggling to fix Indiana's broken property tax system. Time and time again, laws have been passed that provide a temporary solution to the problem, only to have another legislature come along and undo all the progress that was made. When you consider how much property tax law has changed in this decade alone you can see why permanency is the only way to ultimately resolve this situation.

            The caps require local units of government to become more frugal with tax dollars, more efficient with services rendered, and more lean with budgets passed. This frugality and efficiency will enable local governments to utilize new and better ways of serving its citizens.  

Most importantly, we must find ways to put Hoosiers back to work. When our unemployment rate drops, revenues will increase and the state will be back on the right track. I'm personally filing legislation this session aimed at giving employers more opportunities to create more jobs and retain the ones they have currently.

I have co-authored three individual bills to help steer the state back in the right direction. These bills delay massive insurance tax increases, require state agencies to give preference to Indiana manufacturers when making purchases, and create economic development measures to make Indiana the first choice for business retention, expansion, and relocation.

Indiana's economic comeback will be my number one priority when I'm down in Indianapolis representing you.  Please don't hesitate to contact me with your suggestions by e-mail at h20@in.gov, by phone at 1-800-382-9841, by writing me at the Statehouse, 200 W. Washington Street, Indianapolis, IN 46204 or by visiting my website at http://www.in.gov/h20.